China's Greenhouse Gas emissions’ dynamic effects in the process of its urbanization: A perspective from shocks decomposition under long-term constraints

Abstract

Abstract This paper is about to quantify the effect of China's urbanization on greenhouse gas (GHG) emissions by separating the part driven by the economic growth from the whole effect. In order to be accurate to estimate unknown parameters, this paper follows the method of Blanchard & Quah (1989), in which identifying conditions are set by assuming some shocks have no long-term effect on corresponding explained variables. We conclude that 1) Urbanization shock has an inverted hump-shaped effect on GHG emissions, in other words, nowadays the process of China's urbanization has been accompanied with saving energy and reducing emissions; 2) The growth rate of GHG emissions, owning to the GDP shock, can be raised by almost 1.53% annually and the urbanization level approximately contributes to 18% of the change of CO2 emissions based on empirical results; 3) China's emission reductions, in the short run, are actualy in expense of decreasing economic growth and delaying the p rocess of its urbanization.